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San Jose Hotel Pandelossians refers to the worsening of misfortunes for the market in the Bay region

remon Buul by remon Buul
May 15, 2025
in USA
0
San Jose Hotel Pandelossians refers to the worsening of misfortunes for the market in the Bay region

San Jose – The seizure of a hotel in downtown San Jose in a foreclosure is a new sign that the accommodation markets in the Bay region still have trouble recovering from their economic diseases induced by the coronavirus.

The Signia of Hilton San Jose Hotel was taken by the lender of the tower on May 12 in a foreclosure launched by a suffering loan of $ 134 million.

Planning has evaluated the hotel at $ 80 million, depending on what lender Brightpire Capital paid to seize the property of the accommodation tower at 170 South Market Street in downtown San Jose. This value was 41% lower than the loan of $ 134 million in default.

“We will see more for large hotels with full service, not only in San Jose, but also in Oakland and San Francisco,” said Alan Reay, president of Atlas Hospitality Group, who follows the California accommodation sector.

Economic challenges following the coronavirus mean that the main urban centers such as downtown San Jose must find ways to attract visitors, in the advice of Bob Staedler, Senior Director at Silicon Valley Synergy, a consulting firm for land use.

“San Jose offers experience in the city center, not as the city center was before the coronavirus,” said Staedler.

Unique places such as Urban Putt and Pete Be Lounge can become destinations and help the city center of San Jose to rebound, a recovery which would also underpin the fortune of the city’s hotels.

For the moment, however, the owners of hotels in the bay region must face the dark reality that several economic factors have merged to push the value of the lower properties.

“There are problems throughout the bay region,” said Mark Ritchie, president of Ritchie Commercial, based in San Jose, a real estate company. “There are still a lot of sales in distress. It happens in all cities. “

Diseases in the hotel sector are particularly serious in San Francisco and Oakland, whose city center districts seem to be locked in an economic “destiny loop” of the value of properties, crime, empty commercial buildings and retail flights.

In San Francisco, multiple failures of hotel loans have emerged, in particular the foreclosure of a historic hotel which has a leading perch at the top of Nob Hill and the decision of several hotel owners to simply put their properties back to lenders rather than continuing to make loan payments.

“The problems in San Francisco are widespread,” said Reay. “People simply give lenders the keys to the hotel and go away.”

In Oakland, the default values, entries, failing loans and nose -nose values ​​have haunted several hotel properties.

Here are some examples of the difficulties in Oakland:

– Hilton Oakland Airport, the closest hotel to East Bay City airport, reduced 152 jobs and suddenly closed in August 2024. The hotel remains closed.

– Courtyard Oakland Downtown, a Marriott brand hotel, was bought in October 2024 for $ 10.6 million. The purchase price represented a breathtaking diving of 76% compared to what the buyer paid in 2016.

– The Waterfront hotel with 145 rooms in Jack London Square stopped without warning in January 2025.

– Oakland City Center Marriott, a 500 -room hotel next to the city’s congress center, was default in February 2025 on a loan of $ 100 million and faces foreclosure if delinquency is not cured.

– A hotel of 1431 Jefferson Street in downtown Oakland with Dual Marriott Brands was seized by his lender until March 2025 thanks to the foreclosure of a offender loan of $ 112 million for the accommodation tower.

“Interest rate costs are increasing, which makes owners very difficult to find funding to replace their previous loans,” said Reay. “The owner sees that the monthly mortgage payments will be higher than the hotel income. He therefore decides to move away and stop making loans. ”

This means that the challenges of low values ​​and loan charges will continue to crush positive trends such as increasing occupation and income levels.

“We see a big peak in payment defects,” said Reay. “Analysts believe that one in three hotel owners restore the keys to lenders.”

This sets up a cascade scenario, according to Reay.

“Dominoes fall,” said Reay. “Hotel owners see that asset values ​​will dive. The owner simply says that it is time to fold their cards. ”

All this is a reminder that the three largest districts in the city center in the Bay region must face the reality that their pre-coronavirus local economies have been fundamentally modified.

“The structure of city center and people who go to them are not the same,” said Ritchie. “Things are improving, but that will not come back where it was. It’s a different world now.”

California Daily Newspapers

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